Ex-Marsh & McLennan Executives Guilty of Monopoly
Two former Marsh %26amp; McLennan Cos.
executives were found guilty of restraint of trade and acquitted
of 20 other charges after the first bid-rigging trial in a New
York probe of anticompetitive insurance sales practices.
William Gilman and Edward McNenney were the first of seven
former executives at the worlds largest insurance brokerage to
face trial for fraud in the investigation. They were accused by
the New York Attorney Generals Office of fixing prices to steer
business to insurers that paid their company hidden fees. The
remaining five defendants are awaiting trial.
New York State Supreme Court Justice James Yates, who heard
the case in Manhattan without a jury, found the two men guilty of
the sole count of monopoly or restraint of trade under New Yorks
antitrust statutes today after a 10-month trial. They face as
much as four years in prison when they are sentenced April 30.
“For ultimately all of the counts, the judge saw the
undeniable truth, said Robert Cleary, a lawyer for Gilman,
adding he would appeal the lone conviction. “The verdict on that
count is fatally flawed.
Yates didnt explain his verdict. Twenty-one former
employees of Marsh %26amp; McLennan, American International Group Inc.
and three other companies have pleaded guilty to felonies or
misdemeanors since former state Attorney General Eliot Spitzer
initiated the inquiry in 2004.
Almost Half
“We are gratified that the court found the defendants
guilty of felony bid-rigging, said Jeffrey Lerner, a spokesman
for New York Attorney General Andrew Cuomo.
New York-based Marsh %26amp; McLennan lost almost half its market
value and ousted former Chief Executive Officer Jeffrey Greenberg
before settling a related civil lawsuit filed by Spitzer in 2005.
The brokerage settled for $850 million over accusations that it
rigged bids and took kickbacks from insurers.
Gilman, 64, formerly Marshs executive marketing director
and managing director, and McNenney, the ex-global placement
director and managing director, worked in the Excess Casualty
Unit of Marsh Global Broking, a subsidiary of Marsh Inc.
Between November 1998 and September 2004, the defendants
allegedly defrauded clients including Intel Corp., Vivendi
Universal SA and Fortune Brands Inc., according to a 2005
indictment.
The two men were accused of falsely representing bids to
customers by predetermining winners and soliciting losing quotes
from other insurers. Gilman enforced the system, threatening to
take business away from insurers if they didnt inflate their
quotes, according to Spitzers suit.
`Bidding Prices
“Competitive bidding prices bring down prices for the
client, Assistant Attorney General Elizabeth Nochlin said in
closing arguments. “These defendants, these insurance brokers,
didnt want that competition to occur.
Stephen Neal, a lawyer for McNenney, said in closing
arguments Feb. 13 that the prosecutors didnt prove that his
client intended to harm any Marsh client.
“The prosecutors failed to prove, let alone by a reasonable
doubt, that Mr. McNenney engaged in any challenged conduct,
Neal said. “The evidence is overwhelmingly inconsistent with the
existence of any unified, overarching scheme as alleged by the
prosecution.
Neal said today that he was “pleased with the verdict and
would appeal the conviction on the sole count. Yates acquitted
the defendants of scheme to defraud in the first degree, nine
counts of grand larceny in the second degree and 10 counts of
grand larceny in the third degree.
“The criminal trial that concluded today was not against
Marsh, but against two former employees, Marsh spokesman Al
Modugno said. “These proceedings and todays verdict are about
the past.
Marsh %26amp; McLennan rose 31 cents to $26.03 at 4 p.m. in New
York Stock Exchange composite trading.
The case is People of the State of New York v. Doherty,
04800-2005, New York State Supreme Court, County of New York
(Manhattan).
